Waiver of attorney-client privilege via issue injection: a call for uniformity.

• Author: Bahner, T. Maxfield

Practitioners are faced with uncertainties that should be settled as to when issue injection defeats the attorney-client privilege

DURING the past two decades, the doctrine of implied waiver of the attorney-client privilege has been reshaped and re-evaluated by the courts. Unfortunately, this surge of activity has failed to yield a uniform approach. As a result, the law of implied waiver is currently a confusing web of competing tests and ad hoc applications that force practitioners to speculate on the exact scope and application of the doctrine.

With complex, document-intensive litigation on the rise, it is vital for courts to provide clear guidance as to when confidential communications will be subject to exposure. That guidance does not exist. Courts that adopt a restrictive interpretation find implied waiver of the attorney-client privilege only if a party directly injects reliance on the advice of counsel as a claim or defense.(1) On the other hand, courts that favor a liberal interpretation have extended the implied waiver doctrine to any claim or defense that merely places a party's own state of mind into issue.(2)

The implied waiver of the attorney-client privilege usually arises in the context of claims or defenses such as equitable tolling of the statute of limitations, good faith, justifiable reliance, estoppel, fraudulent misrepresentation, or contact interpretation. Absent certainty on the scope of implied waiver, practitioners run the risk of impairing their client's position.

ATTORNEY-CLIENT PRIVILEGE

The attorney-client privilege protects certain communications between attorneys and clients. However, the privilege observed by federal courts differs from that used by many state courts, and the privilege also varies from state to state.

Traditionally, federal courts rely on either Wigmore's or Wyzanski's interpretation of the attorney-client privilege. The Wigmore construction provides:

(1) where legal advice of any kind is sought, (2) from a professional legal advisor in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected, (7) from disclosure by himself or by the legal advisor, (8) except the protection may be waived.(3) The more elaborate Wyzanski interpretation states:

The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.(4) Unlike the federal interpretation, the Tennessee rule stated in Section 23-3-106 of the Tennessee Code protects only communications made by a client to an attorney:

(a) No attorney, solicitor or counselor shall be permitted, in giving testimony against a client, or person who has consulted the attorney, solicitor or counselor professionally, to disclose any communication made to the attorney, solicitor or counselor as such by such person, during the pendency of the suit, before or afterwards, to his injury. Depending on their perspectives, courts have characterized the attorney-client privilege on a spectrum from a roadblock to the truth to an essential tool in the legal representation of a client.(5) Regardless of the characterization, the attorney-client privilege does prevent discovery of potentially relevant communications, but society has subordinated the search for truth to a preferred value: "the full and free right to assistance of counsel."(6) The privilege is not absolute, however; clients may waive it either expressly or impliedly. Protecting the benefits offered by the privilege, while at the same time preventing abuses that erode the privilege, has presented a tension that is still unresolved in many jurisdictions.

To reap the entire benefit of legal advice, clients must feel free to provide full and candid disclosure to their attorneys. In complex areas, such as professional malpractice, business law, securities, and antitrust, frank communication cloaked by the attorney-client privilege encourages compliance with the law. Thus, inherent in the protection afforded by this privilege is the need for certainty and predictability in its application.

WAIVER

Two general categories of waiver of the attorney-client privilege have developed: (1) actual (express) waiver, and (2) implied subject matter waiver. Actual waiver occurs when confidential communications are disclosed to a third party, outside the attorney-client relationship. By contrast, implied subject matter waiver occurs when confidential communications are disclosed or injected as part of a claim or defense in litigation.

Commentators often divide implied subject matter waiver into the subcategories: (1) issue injection and (2) selective disclosure. Issue injection occurs when a litigant puts the substance of a confidential communication in issue in litigation. Selective disclosure occurs when a litigant discloses a portion of the confidential communication, while invoking the privilege to shield the remainder.(7)

Because of the rapid development of the law and the haphazard treatment of issue injection waiver, this article focuses exclusively on that form of waiver.

ISSUE INJECTION

In theory, the concept of issue injection seems simple and just. Clients waive the attorney-client privilege if they affirmatively plead a claim or defense that places the confidential communication at issue. However, in practice, courts have struggled to apply this doctrine even-handedly and to define its precise scope. While most courts have recognized some form of issue injection waiver, their treatment has been anything but uniform. While by no means exclusive, three tests have emerged as the traditional approaches to analyze issue injection waiver. Often cited in tandem, the three tests are (1) the automatic waiver rule,(8) the balancing test,(9) and the Hearn test.(10) In addition, a fourth approach, the anticipatory waiver test, has gained recent approval.(11)

1. Automatic Wavier Rule

   First defined in Independent Products Corp. v. Loew's Inc.,(12) the automatic waiver rule provides that a litigant who asserts a claim, counterclaim, or affirmative defense injecting an issue into the forefront of the litigation automatically waives all corresponding privileges.

   In Loew's, the plaintiffs filed an antitrust suit, claiming conspiracy to obstruct the distribution of a motion picture. The defendants deposed the president and sole stockholder of one of the plaintiff corporations, inquiring about the president's supposedly subversive beliefs and connections. During the deposition, the president invoked his First and Fifth Amendment privileges. The U.S. District Court for the Southern District of New York held that the inquiry was relevant and that the president had waived his constitutional privileges merely by prompting his company to initiate suit. "Plaintiffs in this civil action have initiated the action and forced defendants into court." The court stated, "They cannot use this asserted privilege as both a sword and a shield."

   Loew's reasoning is that the presentation of a...